transparent hair texture for the BGE
I can help you display alpha maps, but I'm sorry I can't help you with the hair specifically. 

Displaying alpha textures in the BGE

Step 1

Set the scene shading to "GLSL". Alpha textures don't work in the default "MultiTexture" setting. If you create a new game scene, you will have to repeat this step.



Step 2

Add transparency to your material!!! Unless you specifically tell blender, it won't know how to use the alpha you've given it. Check the "Transparency" option under the material tab, set it to "z-trace" and pull the drag bar all the way down to zero (0).



Step 3

Now you need to make some changes to the texture settings of your object. Assuming you've already given the material a texture, you only need to do a few things:


Enable "Use Alpha"
Enable "Alpha" under the "influence" tab